California Wholesaler or Nonresident Wholesaler Surety Bond

A wholesaler license is compulsory for any company or business that brokers, distributes or transacts the retailing or return of dangerous drugs or dangerous devices into or inside California to other wholesalers, pharmacies or practitioners.

A licensed manufacturer that only dispenses drugs of their own manufacture, all of which have an accepted new drug manufacturing application on file with the FDA (Food and Drug Administration) are free from having to acquire this surety bond obligation. If you need to document this exemption all you need to do is provide the California State Board of Pharmacy a list of manufactured drugs which would include the respective NDC Number (National Drug Code, which is a universal product identifier for human drugs) along with a statement certifying that the business only distributes its own products.

Any contender for initial licensure or license renewal as a wholesaler or nonresident wholesaler (previously known as an out-of-state distributor or dispenser) must present a surety bond of $100,000 made payable to the Pharmacy Board Contingency Fund. All new businesses and/or companies must do one of the following three (3 )options in order to get their license: 1) Obtain the required $100,000 surety bond, 2) obtain an ILOC (Irrevocable Standby Letter of Credit) or 3) provide a Cash Deposit in Lieu of Bond. The ILOC is a document issued by your bank that essentially acts as an irrevocable guarantee of payment to an obligee. This means that if you do not perform your obligations, your bank pays. ILOC’s cannot be cancelled or amended without all the parties in agreement. A Cash Deposit In Lieu of Bond is essentially the principle (or Assignor as they are know in this instance) providing the required cash dollar amount to the California State Board of Pharmacy that is equivalent to that of the surety bond requirement. It is understood that the Board is not authorized to give back the cash deposit until sixty days beyond the date upon which an owner no longer licensed by the Board, or ceases to do business as a wholesaler.

If your company and/or business own several subsidiary companies that are reflected as the owners of wholesalers, then you are only required to have one bond. Simply provide the California State Board of Pharmacy a copy of the organization chart documenting the ultimate owner of the subsidiary companies verifying the familiar ownership.

In the future should the company or business be able to demonstrate their annual gross receipts of $10,000,000 or less, a new and lesser bond amount of $25,000 may be secured in lieu of the initial $100,000 bond amount.